‘China’s edge and America’s fragility’

This is apropos two back-to-back letters to the Editor from this writer carried by the newspaper on Tuesday and yesterday. It is here that the familiar American toolkit—tariffs, export controls, and the weaponization of data and finance—meets its limit. Measures of this kind can unsettle smaller or more fragile economies; they have done so repeatedly in the past.

They are far less effective against a state with a continental-scale market, deep foreign-exchange reserves, a disciplined industrial policy, and broad capacity to substitute or reroute flows when pressured. China has spent years preparing for that pressure by localizing essential inputs, building parallel financial pipes, and hardening its digital and data regimes. A country that can supply so much of its own demand and anchor so many others’ supply is not easily forced to change course from the outside.

That is why the question posed in the hearing—will punitive tariffs work this time—lands differently today. Tariffs can raise Chinese costs at the American border, but they also raise costs for American producers who rely on Chinese inputs at every intermediate step.

If the response from Beijing is to ratchet controls on minerals, chemicals, or magnet materials, the downstream impact is immediate: delays, higher bills, and quality slippage as firms scramble for substitutes. The economic effect accumulates in quieter ways as well. Investment decisions are deferred; projects are redesigned; factories operate below capacity. The result is slower growth and a steady erosion of credibility in the claim that America can out-produce its rival where it matters most.

Copyright Business Recorder, 2025